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11/12/2015 G.R. No. 115455 http://www.lawphil.net/judjuris/juri1995/oct1995/gr_115455_1995.html 1/14 Today is Thursday, November 12, 2015 Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. 115455 October 30, 1995 ARTURO M. TOLENTINO, petitioner, vs. THE SECRETARY OF FINANCE and THE COMMISSIONER OF INTERNAL REVENUE, respondents. G.R. No. 115525 October 30, 1995 JUAN T. DAVID, petitioner, vs. TEOFISTO T. GUINGONA, JR., as Executive Secretary; ROBERTO DE OCAMPO, as Secretary of Finance; LIWAYWAY VINZONSCHATO, as Commissioner of Internal Revenue; and their AUTHORIZED AGENTS OR REPRESENTATIVES, respondents. G.R. No. 115543 October 30, 1995 RAUL S. ROCO and the INTEGRATED BAR OF THE PHILIPPINES, petitioners, vs. THE SECRETARY OF THE DEPARTMENT OF FINANCE; THE COMMISSIONERS OF THE BUREAU OF INTERNAL REVENUE AND BUREAU OF CUSTOMS, respondents. G.R. No. 115544 October 30, 1995 PHILIPPINE PRESS INSTITUTE, INC.; EGP PUBLISHING CO., INC.; KAMAHALAN PUBLISHING CORPORATION; PHILIPPINE JOURNALISTS, INC.; JOSE L. PAVIA; and OFELIA L. DIMALANTA, petitioners, vs. HON. LIWAYWAY V. CHATO, in her capacity as Commissioner of Internal Revenue; HON. TEOFISTO T. GUINGONA, JR., in his capacity as Executive Secretary; and HON. ROBERTO B. DE OCAMPO, in his capacity as Secretary of Finance, respondents. G.R. No. 115754 October 30, 1995 CHAMBER OF REAL ESTATE AND BUILDERS ASSOCIATIONS, INC., (CREBA), petitioner, vs. THE COMMISSIONER OF INTERNAL REVENUE, respondent. G.R. No. 115781 October 30, 1995 KILOSBAYAN, INC., JOVITO R. SALONGA, CIRILO A. RIGOS, ERME CAMBA, EMILIO C. CAPULONG, JR., JOSE T. APOLO, EPHRAIM TENDERO, FERNANDO SANTIAGO, JOSE ABCEDE, CHRISTINE TAN, FELIPE L. GOZON, RAFAEL G. FERNANDO, RAOUL V. VICTORINO, JOSE CUNANAN, QUINTIN S. DOROMAL, MOVEMENT OF ATTORNEYS FOR BROTHERHOOD, INTEGRITY AND NATIONALISM, INC. ("MABINI"), FREEDOM FROM DEBT COALITION, INC., and PHILIPPINE BIBLE SOCIETY, INC. and WIGBERTO TAÑADA, petitioners, vs. THE EXECUTIVE SECRETARY, THE SECRETARY OF FINANCE, THE COMMISSIONER OF INTERNAL REVENUE and THE COMMISSIONER OF CUSTOMS, respondents. G.R. No. 115852 October 30, 1995 PHILIPPINE AIRLINES, INC., petitioner, vs.

Tolentino v. Secretary of Finance 1995

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Text of Tolentino v. Secretary of Finance 1995

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    TodayisThursday,November12,2015

    RepublicofthePhilippinesSUPREMECOURT

    Manila

    ENBANC

    G.R.No.115455October30,1995

    ARTUROM.TOLENTINO,petitioner,vs.THESECRETARYOFFINANCEandTHECOMMISSIONEROFINTERNALREVENUE,respondents.

    G.R.No.115525October30,1995

    JUANT.DAVID,petitioner,vs.TEOFISTOT.GUINGONA,JR.,asExecutiveSecretaryROBERTODEOCAMPO,asSecretaryofFinanceLIWAYWAYVINZONSCHATO,asCommissionerofInternalRevenueandtheirAUTHORIZEDAGENTSORREPRESENTATIVES,respondents.

    G.R.No.115543October30,1995

    RAULS.ROCOandtheINTEGRATEDBAROFTHEPHILIPPINES,petitioners,vs.THESECRETARYOFTHEDEPARTMENTOFFINANCETHECOMMISSIONERSOFTHEBUREAUOFINTERNALREVENUEANDBUREAUOFCUSTOMS,respondents.

    G.R.No.115544October30,1995

    PHILIPPINEPRESSINSTITUTE,INC.EGPPUBLISHINGCO.,INC.KAMAHALANPUBLISHINGCORPORATIONPHILIPPINEJOURNALISTS,INC.JOSEL.PAVIAandOFELIAL.DIMALANTA,petitioners,vs.HON.LIWAYWAYV.CHATO,inhercapacityasCommissionerofInternalRevenueHON.TEOFISTOT.GUINGONA,JR.,inhiscapacityasExecutiveSecretaryandHON.ROBERTOB.DEOCAMPO,inhiscapacityasSecretaryofFinance,respondents.

    G.R.No.115754October30,1995

    CHAMBEROFREALESTATEANDBUILDERSASSOCIATIONS,INC.,(CREBA),petitioner,vs.THECOMMISSIONEROFINTERNALREVENUE,respondent.

    G.R.No.115781October30,1995

    KILOSBAYAN,INC.,JOVITOR.SALONGA,CIRILOA.RIGOS,ERMECAMBA,EMILIOC.CAPULONG,JR.,JOSET.APOLO,EPHRAIMTENDERO,FERNANDOSANTIAGO,JOSEABCEDE,CHRISTINETAN,FELIPEL.GOZON,RAFAELG.FERNANDO,RAOULV.VICTORINO,JOSECUNANAN,QUINTINS.DOROMAL,MOVEMENTOFATTORNEYSFORBROTHERHOOD,INTEGRITYANDNATIONALISM,INC.("MABINI"),FREEDOMFROMDEBTCOALITION,INC.,andPHILIPPINEBIBLESOCIETY,INC.andWIGBERTOTAADA,petitioners,vs.THEEXECUTIVESECRETARY,THESECRETARYOFFINANCE,THECOMMISSIONEROFINTERNALREVENUEandTHECOMMISSIONEROFCUSTOMS,respondents.

    G.R.No.115852October30,1995

    PHILIPPINEAIRLINES,INC.,petitioner,vs.

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    THESECRETARYOFFINANCEandCOMMISSIONEROFINTERNALREVENUE,respondents.

    G.R.No.115873October30,1995

    COOPERATIVEUNIONOFTHEPHILIPPINES,petitioner,vs.HON.LIWAYWAYV.CHATO,inhercapacityastheCommissionerofInternalRevenue,HON.TEOFISTOT.GUINGONA,JR.,inhiscapacityasExecutiveSecretary,andHON.ROBERTOB.DEOCAMPO,inhiscapacityasSecretaryofFinance,respondents.

    G.R.No.115931October30,1995

    PHILIPPINEEDUCATIONALPUBLISHERSASSOCIATION,INC.andASSOCIATIONOFPHILIPPINEBOOKSELLERS,petitioners,vs.HON.ROBERTOB.DEOCAMPO,astheSecretaryofFinanceHON.LIWAYWAYV.CHATO,astheCommissionerofInternalRevenueandHON.GUILLERMOPARAYNO,JR.,inhiscapacityastheCommissionerofCustoms,respondents.

    RESOLUTION

    MENDOZA,J.:

    Thesearemotionsseeking reconsiderationof ourdecisiondismissing thepetitions filed in thesecases for thedeclarationofunconstitutionalityofR.A.No.7716,otherwiseknownastheExpandedValueAddedTaxLaw.Themotions,ofwhichthereare10inall,havebeenfiledbytheseveralpetitionersinthesecases,withtheexceptionofthePhilippineEducationalPublishersAssociation,Inc.andtheAssociationofPhilippineBooksellers,petitionersinG.R.No.115931.

    The Solicitor General, representing the respondents, filed a consolidated comment, to which the PhilippineAirlines,Inc.,petitionerinG.R.No.115852,andthePhilippinePressInstitute,Inc.,petitionerinG.R.No.115544,andJuanT.David,petitionerinG.R.No.115525,eachfiledareply.InturntheSolicitorGeneralfiledonJune1,1995arejoindertothePPI'sreply.

    OnJune27,1995thematterwassubmittedforresolution.

    I.PoweroftheSenatetoproposeamendmentstorevenuebills.Someofthepetitioners(Tolentino,Kilosbayan,Inc., PhilippineAirlines (PAL),Roco, andChamber ofRealEstate andBuildersAssociation (CREBA)) reiteratepreviousclaimsmadebythemthatR.A.No.7716didnot"originateexclusively"intheHouseofRepresentativesasrequiredbyArt.VI,24of theConstitution.Althoughtheyadmit thatH.No.11197wasfiled in theHouseofRepresentativeswhere it passed three readings and that afterward itwas sent to theSenatewhere after firstreadingitwasreferredtotheSenateWaysandMeansCommittee,theycomplainthattheSenatedidnotpassitonsecondand third readings. Insteadwhat theSenatedidwas topass itsownversion (S.No.1630)which itapprovedonMay24,1994.PetitionerTolentinoaddsthatwhattheSenatecommitteeshouldhavedonewastoamendH.No.11197bystrikingoutthetextofthebillandsubstitutingitwiththetextofS.No.1630.Thatway,itissaid,"thebill remainsaHousebillandtheSenateversion justbecomesthetext(onlythetext)of theHousebill."

    Thecontentionhasnomerit.

    TheenactmentofS.No.1630isnottheonlyinstanceinwhichtheSenateproposedanamendmenttoaHouserevenuebillbyenactingitsownversionofarevenuebill.OnatleasttwooccasionsduringtheEighthCongress,the Senate passed its own version of revenue bills, which, in consolidation with House bills earlier passed,becametheenrolledbills.Thesewere:

    R.A. No. 7369 (ANACT TOAMENDTHEOMNIBUS INVESTMENTSCODEOF 1987BYEXTENDINGFROMFIVE (5) YEARS TO TEN YEARS THE PERIOD FOR TAX AND DUTY EXEMPTION AND TAX CREDIT ONCAPITAL EQUIPMENT) which was approved by the President on April 10, 1992. This Act is actually aconsolidationofH.No.34254,whichwasapprovedbytheHouseonJanuary29,1992,andS.No.1920,whichwasapprovedbytheSenateonFebruary3,1992.

    R.A. No. 7549 (AN ACT GRANTING TAX EXEMPTIONS TO WHOEVER SHALL GIVE REWARD TO ANYFILIPINOATHLETEWINNINGAMEDALINOLYMPICGAMES)whichwasapprovedbythePresidentonMay22,1992. This Act is a consolidation of H. No. 22232, which was approved by the House of Representatives onAugust2,1989,andS.No.807,whichwasapprovedbytheSenateonOctober21,1991.

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    Ontheotherhand, theNinthCongresspassed revenue lawswhichwerealso the resultof theconsolidationofHouseandSenatebills.Thesearethefollowing,withindicationsofthedatesonwhichthelawswereapprovedbythePresidentanddatestheseparatebillsofthetwochambersofCongresswererespectivelypassed:

    1.R.A.NO.7642

    ANACTINCREASINGTHEPENALTIESFORTAXEVASION,AMENDINGFORTHISPURPOSETHEPERTINENTSECTIONSOFTHENATIONALINTERNALREVENUECODE(December28,1992).

    HouseBillNo.2165,October5,1992

    SenateBillNo.32,December7,1992

    2.R.A.NO.7643

    AN ACT TO EMPOWER THE COMMISSIONER OF INTERNAL REVENUE TO REQUIRE THEPAYMENTOFTHEVALUEADDEDTAXEVERYMONTHANDTOALLOWLOCALGOVERNMENTUNITSTOSHAREINVATREVENUE,AMENDINGFORTHISPURPOSECERTAINSECTIONSOFTHENATIONALINTERNALREVENUECODE(December28,1992)

    HouseBillNo.1503,September3,1992

    SenateBillNo.968,December7,1992

    3.R.A.NO.7646

    AN ACT AUTHORIZING THE COMMISSIONER OF INTERNAL REVENUE TO PRESCRIBE THEPLACE FOR PAYMENT OF INTERNAL REVENUE TAXES BY LARGE TAXPAYERS, AMENDINGFORTHISPURPOSECERTAINPROVISIONSOFTHENATIONALINTERNALREVENUECODE,ASAMENDED(February24,1993)

    HouseBillNo.1470,October20,1992

    SenateBillNo.35,November19,1992

    4.R.A.NO.7649

    AN ACT REQUIRING THE GOVERNMENT OR ANY OF ITS POLITICAL SUBDIVISIONS,INSTRUMENTALITIES OR AGENCIES INCLUDING GOVERNMENTOWNED OR CONTROLLEDCORPORATIONS(GOCCS)TODEDUCTANDWITHHOLDTHEVALUEADDEDTAXDUEATTHERATEOFTHREEPERCENT(3%)ONGROSSPAYMENTFORTHEPURCHASEOFGOODSANDSIXPERCENT(6%)ONGROSSRECEIPTSFORSERVICESRENDEREDBYCONTRACTORS(April6,1993)

    HouseBillNo.5260,January26,1993

    SenateBillNo.1141,March30,1993

    5.R.A.NO.7656

    ANACTREQUIRINGGOVERNMENTOWNEDORCONTROLLEDCORPORATIONSTODECLAREDIVIDENDS UNDER CERTAIN CONDITIONS TO THE NATIONAL GOVERNMENT, AND FOROTHERPURPOSES(November9,1993)

    HouseBillNo.11024,November3,1993

    SenateBillNo.1168,November3,1993

    6.R.A.NO.7660

    AN ACT RATIONALIZING FURTHER THE STRUCTURE AND ADMINISTRATION OF THEDOCUMENTARYSTAMPTAX,AMENDINGFORTHEPURPOSECERTAINPROVISIONSOFTHENATIONAL INTERNAL REVENUE CODE, AS AMENDED, ALLOCATING FUNDS FOR SPECIFICPROGRAMS,ANDFOROTHERPURPOSES(December23,1993)

    HouseBillNo.7789,May31,1993

    SenateBillNo.1330,November18,1993

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    7.R.A.NO.7717

    AN ACT IMPOSING A TAX ON THE SALE, BARTER OR EXCHANGE OF SHARES OF STOCKLISTEDANDTRADEDTHROUGHTHELOCALSTOCKEXCHANGEORTHROUGHINITIALPUBLICOFFERING, AMENDING FOR THE PURPOSE THE NATIONAL INTERNAL REVENUE CODE, ASAMENDED, BY INSERTING A NEW SECTION AND REPEALING CERTAIN SUBSECTIONSTHEREOF(May5,1994)

    HouseBillNo.9187,November3,1993

    SenateBillNo.1127,March23,1994

    Thus,theenactmentofS.No.1630isnottheonlyinstanceinwhichtheSenate, intheexerciseof itspowertopropose amendments to bills required to originate in the House, passed its own version of a House revenuemeasure.Itisnoteworthythat,intheparticularcaseofS.No.1630,petitionersTolentinoandRoco,asmembersoftheSenate,votedtoapproveitonsecondandthirdreadings.

    On theotherhand,amendmentby substitution, in themannerurgedbypetitionerTolentino, concernsamerematterofform.Petitionerhasnotshownwhatsubstantialdifferenceitwouldmakeif,astheSenateactuallydidinthiscase,aseparatebilllikeS.No.1630isinsteadenactedasasubstitutemeasure,"takingintoConsideration...H.B.11197."

    Indeed,sofaraspertinent,theRulesoftheSenateonlyprovide:

    RULEXXIX

    AMENDMENTS

    xxxxxxxxx

    68.Notmorethanoneamendmenttotheoriginalamendmentshallbeconsidered.

    Noamendmentbysubstitutionshallbeentertainedunlessthetextthereofissubmittedinwriting.

    Anyofsaidamendmentsmaybewithdrawnbeforeavoteistakenthereon.

    69.Noamendmentwhichseekstheinclusionofalegislativeprovisionforeigntothesubjectmatterofabill(rider)shallbeentertained.

    xxxxxxxxx

    70A.Abillorresolutionshallnotbeamendedbysubstitutingitwithanotherwhichcoversasubjectdistinctfromthatproposedintheoriginalbillorresolution.(emphasisadded).

    Noristheremeritinpetitioners'contentionthat,withregardtorevenuebills,thePhilippineSenatepossesseslesspower than the U.S. Senate because of textual differences between constitutional provisions giving them thepowertoproposeorconcurwithamendments.

    Art.I,7,cl.1oftheU.S.Constitutionreads:

    All Bills for raising Revenue shall originate in the House of Representatives but the Senate mayproposeorconcurwithamendmentsasonotherBills.

    Art.VI,24ofourConstitutionreads:

    All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of localapplication, and private bills shall originate exclusively in the House of Representatives, but theSenatemayproposeorconcurwithamendments.

    Theadditionof theword "exclusively" in thePhilippineConstitutionand thedecision todrop thephrase "asonotherBills"intheAmericanversion,accordingtopetitioners,showstheintentionoftheframersofourConstitutionto restrict theSenate's power to propose amendments to revenue bills. Petitioner Tolentino contends that theword"exclusively"wasinsertedtomodify"originate"and"thewords'asinanyotherbills'(sic)wereeliminatedsoastoshowthatthesebillswerenottobelikeotherbillsbutmustbetreatedasaspecialkind."

    Thehistoryof thisprovisiondoesnot support this contention.Thesupposed indicia of constitutional intent arenothingbuttherelicsofanunsuccessfulattempttolimitthepoweroftheSenate.Itwillberecalledthatthe1935ConstitutionoriginallyprovidedforaunicameralNationalAssembly.Whenitwasdecidedin1939tochangetoa

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    bicameral legislature, it became necessary to provide for the procedure for lawmaking by theSenate and theHouse of Representatives. The work of proposing amendments to the Constitution was done by the NationalAssembly, acting as a constituent assembly, some of whose members, jealous of preserving the Assembly'slawmakingpowers,soughttocurtailthepowersoftheproposedSenate.Accordinglytheyproposedthefollowingprovision:

    All bills appropriating public funds, revenue or tariff bills, bills of local application, and private billsshalloriginateexclusivelyintheAssembly,buttheSenatemayproposeorconcurwithamendments.IncaseofdisapprovalbytheSenateofanysuchbills,theAssemblymayrepassthesamebyatwothirdsvoteofallitsmembers,andthereupon,thebillsorepassedshallbedeemedenactedandmaybesubmitted to thePresident for correspondingaction. In theevent that theSenate should fail tofinallyactonanysuchbills,theAssemblymay,afterthirtydaysfromtheopeningofthenextregularsessionofthesamelegislativeterm,reapprovethesamewithavoteoftwothirdsofallthemembersoftheAssembly.Anduponsuchreapproval,thebillshallbedeemedenactedandmaybesubmittedtothePresidentforcorrespondingaction.

    Thespecialcommitteeontherevisionof lawsof theSecondNationalAssemblyvetoedtheproposal. Itdeletedeverything after the first sentence. As rewritten, the proposal was approved by the National Assembly andembodiedinResolutionNo.38,asamendedbyResolutionNo.73.(J.ARUEGO,KNOWYOURCONSTITUTION6566(1950)).TheproposedamendmentwassubmittedtothepeopleandratifiedbythemintheelectionsheldonJune18,1940.

    ThisisthehistoryofArt.VI,18(2)ofthe1935Constitution,fromwhichArt.VI,24ofthepresentConstitutionwasderived.Itexplainswhytheword"exclusively"wasaddedtotheAmericantextfromwhichtheframersofthePhilippineConstitutionborrowedandwhythephrase"asonotherBills"wasnotcopied.Consideringthedefeatofthe proposal, the power of the Senate to propose amendments must be understood to be full, plenary andcomplete "as onotherBills." Thus, because revenuebills are required to originate exclusively in theHouseofRepresentatives,theSenatecannotenactrevenuemeasuresofitsownwithoutsuchbills.Afterarevenuebillispassedandsentover to itby theHouse,however, theSenatecertainlycanpass itsownversionon thesamesubjectmatter.ThisfollowsfromthecoequalityofthetwochambersofCongress.

    ThatthisisalsotheunderstandingofbookauthorsofthescopeoftheSenate'spowertoconcurisclearfromthefollowingcommentaries:

    ThepoweroftheSenatetoproposeorconcurwithamendmentsisapparentlywithoutrestriction.Itwouldseemthatbyvirtueof thispower, theSenatecanpractically rewriteabill required tocomefromtheHouseandleaveonlyatraceoftheoriginalbill.Forexample,ageneralrevenuebillpassedby the lower house of the United States Congress contained provisions for the imposition of aninheritancetax.ThiswaschangedbytheSenateintoacorporationtax.TheamendingauthorityoftheSenatewasdeclaredbytheUnitedStatesSupremeCourttobesufficientlybroadtoenableittomakethealteration.[Flintv.StoneTracyCompany,220U.S.107,55L.ed.389].

    (L.TAADAANDF.CARREON,POLITICALLAWOFTHEPHILIPPINES247(1961))

    TheabovementionedbillsaresupposedtobeinitiatedbytheHouseofRepresentativesbecauseitismorenumerousinmembershipandthereforealsomorerepresentativeofthepeople.Moreover,its members are presumed to be more familiar with the needs of the country in regard to theenactmentofthelegislationinvolved.

    TheSenateis,however,allowedmuchleewayintheexerciseofitspowertoproposeorconcurwithamendments to the bills initiated by the House of Representatives. Thus, in one case, a billintroduced in theU.S.HouseofRepresentativeswaschangedby theSenate tomakeaproposedinheritance tax a corporation tax. It is also accepted practice for the Senate to introduce what isknownasanamendmentbysubstitution,whichmayentirelyreplacethebillinitiatedintheHouseofRepresentatives.

    (I.CRUZ,PHILIPPINEPOLITICALLAW144145(1993)).

    Insum,whileArt.VI,24provides thatallappropriation, revenueor tariffbills,billsauthorizing increaseof thepublicdebt,billsoflocalapplication,andprivatebillsmust"originateexclusivelyintheHouseofRepresentatives,"italsoadds,"buttheSenatemayproposeorconcurwithamendments."Intheexerciseofthispower,theSenatemayproposeanentirelynewbillasasubstitutemeasure.AspetitionerTolentinostates inahighschooltext,acommitteetowhichabillisreferredmaydoanyofthefollowing:

    (1)toendorsethebillwithoutchanges(2)tomakechangesinthebillomittingoraddingsectionsoralteringitslanguage(3)tomakeandendorseanentirelynewbillasasubstitute,inwhichcaseitwillbeknownasacommitteebillor(4)tomakenoreportatall.

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    (A.TOLENTINO,THEGOVERNMENTOFTHEPHILIPPINES258(1950))

    ToexceptfromthisproceduretheamendmentofbillswhicharerequiredtooriginateintheHousebyprescribingthat thenumberof theHousebilland itsotherpartsupto theenactingclausemustbepreservedalthoughthetextoftheSenateamendmentmaybeincorporatedinplaceoftheoriginalbodyofthebillistoinsistonameretechnicality.Atanyratethereisnoruleprescribingthisform.S.No.1630,asasubstitutemeasure,isthereforeasmuchanamendmentofH.No.11197asanywhichtheSenatecouldhavemade.

    II.S.No.1630amereamendmentofH.No.11197.Petitioners'basicerroristhattheyassumethatS.No.1630isan independentanddistinctbill.Hence their repeated references to itscertification that itwaspassedby theSenate "in substitution of S.B. No. 1129, taking into consideration P.S. Res. No. 734 and H.B. No. 11197,"implyingthatthereissomethingsubstantiallydifferentbetweenthereferencetoS.No.1129andthereferencetoH. No. 11197. From this premise, they conclude that R.A. No. 7716 originated both in the House and in theSenate and that it is the product of two "halfbaked bills because neither H. No. 11197 nor S. No. 1630waspassedbybothhousesofCongress."

    Inpointoffact,inseveralinstancestheprovisionsofS.No.1630,clearlyappeartobemereamendmentsofthecorrespondingprovisionsofH.No.11197.TheverytabularcomparisonoftheprovisionsofH.No.11197andS.No. 1630 attached as Supplement A to the basic petition of petitioner Tolentino, while showing differencesbetweenthetwobills,atthesametimeindicatesthattheprovisionsoftheSenatebillwerepreciselyintendedtobeamendmentstotheHousebill.

    Without H. No. 11197, the Senate could not have enacted S. No. 1630. Because the Senate bill was amereamendmentof theHousebill,H.No.11197 in itsoriginal formdidnothavetopasstheSenateonsecondandthreereadings.ItwasenoughthatafteritwaspassedonfirstreadingitwasreferredtotheSenateCommitteeonWaysandMeans.NeitherwasitrequiredthatS.No.1630bepassedbytheHouseofRepresentativesbeforethetwobillscouldbereferredtotheConferenceCommittee.

    ThereislegislativeprecedentforwhatwasdoneinthecaseofH.No.11197andS.No.1630.WhentheHousebillandSenatebill,whichbecameR.A.No.1405(Actprohibitingthedisclosureofbankdeposits),werereferredtoaconferencecommittee,thequestionwasraisedwhetherthetwobillscouldbethesubjectofsuchconference,considering that the bill from one house had not been passed by the other and vice versa. AsCongressmanDuranputthequestion:

    MR.DURAN.Therefore,Iraisethisquestionoforderastoprocedure:IfaHousebillispassedbytheHousebutnotpassedbytheSenate,andaSenatebillofasimilarnatureispassedintheSenatebutnever passed in the House, can the two bills be the subject of a conference, and can a law beenacted from these twobills? I understand that theSenatebill in this particular instancedoesnotrefertoinvestmentsingovernmentsecurities,whereasthebillintheHouse,whichwasintroducedbythe Speaker, covers two subject matters: not only investigation of deposits in banks but alsoinvestigationof investments ingovernmentsecurities.Now,since the twobillsdiffer in theirsubjectmatter,Ibelievethatnolawcanbeenacted.

    Rulingonthepointoforderraised,thechair(SpeakerJoseB.Laurel,Jr.)said:

    THESPEAKER.Thereportof theconferencecommittee is inorder. It isprecisely incaseslikethiswhereaconferenceshouldbehad.IftheHousebillhadbeenapprovedbytheSenate,therewouldhavebeennoneedofaconferencebutpreciselybecause theSenate passedanother bill on thesamesubjectmatter,theconferencecommitteehadtobecreated,andwearenowconsideringthereportofthatcommittee.

    (2CONG.REC.NO.13,July27,1955,pp.384142(emphasisadded))

    III. The President's certification. The fallacy in thinking that H. No. 11197 and S. No. 1630 are distinct andunrelated measures also accounts for the petitioners' (Kilosbayan's and PAL's) contention that because thePresidentseparatelycertified to theneed for the immediateenactmentof thesemeasures,hiscertificationwasineffectualandvoid.Thecertificationhadtobemadeoftheversionofthesamerevenuebillwhichatthemomentwasbeingconsidered.Otherwise,tofollowpetitioners'theory,itwouldbenecessaryforthePresidenttocertifyasmanybillsasarepresentedinahouseofCongresseventhoughthebillsaremerelyversionsofthebillhehasalready certified. It is enough that he certifies the bill which, at the time he makes the certification, is underconsideration.SinceonMarch22,1994theSenatewasconsideringS.No.1630,itwasthatbillwhichhadtobecertified.ForthatmatteronJune1,1993thePresidenthadearliercertifiedH.No.9210forimmediateenactmentbecause itwas theonewhichat that timewasbeing consideredby theHouse.This billwas later substituted,togetherwithotherbills,byH.No.11197.

    As to what Presidential certification can accomplish, we have already explained in themain decision that thephrase"exceptwhenthePresidentcertifiestothenecessityof its immediateenactment,etc." inArt.VI,26(2)

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    qualifies not only the requirement that "printed copies [of a bill] in its final form [must be] distributed to themembers threedaysbefore itspassage"butalso the requirement thatbeforeabill canbecomea law itmusthave passed "three readings on separate days." There is not only textual support for such construction buthistoricalbasisaswell.

    Art.VI,21(2)ofthe1935Constitutionoriginallyprovided:

    (2)NobillshallbepassedbyeitherHouseunlessitshallhavebeenprintedandcopiesthereofinitsfinal formfurnisheditsMembersat least threecalendardaysprior to itspassage,exceptwhenthePresidentshallhavecertifiedtothenecessityofitsimmediateenactment.Uponthelastreadingofabill, no amendment thereof shall be allowed and the question upon its passage shall be takenimmediatelythereafter,andtheyeasandnaysenteredontheJournal.

    Whenthe1973Constitutionwasadopted,itwasprovidedinArt.VIII,19(2):

    (2)Nobill shall becomea lawunless it haspassed three readingson separatedays, andprintedcopiesthereofinitsfinalformhavebeendistributedtotheMembersthreedaysbeforeitspassage,exceptwhenthePrimeMinistercertifiestothenecessityofitsimmediateenactmenttomeetapubliccalamityoremergency.Uponthelastreadingofabill,noamendmenttheretoshallbeallowed,andthe vote thereon shall be taken immediately thereafter, and the yeas and nays entered in theJournal.

    This provision of the 1973 document, with slight modification, was adopted in Art. VI, 26 (2) of the presentConstitution,thus:

    (2) No bill passed by either House shall become a law unless it has passed three readings onseparatedays,andprintedcopiesthereofinitsfinalformhavebeendistributedtoitsMembersthreedays before its passage, except when the President certifies to the necessity of its immediateenactment tomeetapubliccalamityoremergency.Upon the last readingofabill,noamendmenttheretoshallbeallowed,and thevote thereonshallbe taken immediately thereafter,and the yeasandnaysenteredintheJournal.

    Theexception isbasedon theprudentialconsideration that if inallcases threereadingsonseparatedaysarerequiredandabillhastobeprinted in final formbefore itcanbepassed, theneedfora lawmayberenderedacademicbytheoccurrenceoftheveryemergencyorpubliccalamitywhichitismeanttoaddress.

    Petitioners further contend thata "growingbudgetdeficit" isnotanemergency,especially inacountry like thePhilippineswhere budget deficit is a chronic condition.Even if thiswere the case, an enormousbudget deficitdoesnotmaketheneedforR.A.No.7716anylessurgentorthesituationcallingfor itsenactmentanylessanemergency.

    Apparently,themembersoftheSenate(includingsomeofthepetitionersinthesecases)believedthattherewasanurgentneedforconsiderationofS.No.1630,becausetheyrespondedtothecallofthePresidentbyvotingonthebillonsecondandthirdreadingsonthesameday.WhilethejudicialdepartmentisnotboundbytheSenate'sacceptanceof thePresident's certification, the respect duecoequal departmentsof thegovernment inmatterscommittedtothembytheConstitutionandtheabsenceofaclearshowingofgraveabuseofdiscretioncautionastayofthejudicialhand.

    At any rate, we are satisfied that S. No. 1630 received thorough consideration in the Senate where it wasdiscussed for six days.Only its distribution in advance in its final printed formwas actually dispensedwith byholding thevotingonsecondand third readingson thesameday (March24,1994).Otherwise, sufficient timebetweenthesubmissionofthebillonFebruary8,1994onsecondreadinganditsapprovalonMarch24,1994elapsedbeforeitwasfinallyvotedonbytheSenateonthirdreading.

    The purpose for which three readings on separate days is required is said to be twofold: (1) to inform themembers of Congress of what theymust vote on and (2) to give them notice that ameasure is progressingthroughtheenactingprocess,thusenablingthemandothersinterestedinthemeasuretopreparetheirpositionswith reference to it. (1 J. G. SUTHERLAND, STATUTES AND STATUTORY CONSTRUCTION 10.04, p. 282(1972)).ThesepurposesweresubstantiallyachievedinthecaseofR.A.No.7716.

    IV. Power of Conference Committee. It is contended (principally by Kilosbayan, Inc. and the Movement ofAttorneysforBrotherhood,IntegrityandNationalism,Inc.(MABINI))thatinviolationoftheconstitutionalpolicyoffullpublicdisclosureandthepeople'srighttoknow(Art.II,28andArt.III,7)theConferenceCommitteemetfortwodaysinexecutivesessionwithonlytheconfereespresent.

    Aspointedout inourmaindecision,evenintheUnitedStatesitwascustomarytoholdsuchsessionswithonlytheconfereesandtheirstaffsinattendanceanditwasonlyin1975whenanewrulewasadoptedrequiringopen

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    sessions. Unlike its American counterpart, the Philippine Congress has not adopted a rule prescribing openhearingsforconferencecommittees.

    ItisneverthelessclaimedthatintheUnitedStates,beforetheadoptionoftherulein1975,atleaststaffmemberswerepresent.ThesewerestaffmembersoftheSenatorsandCongressmen,however,whomaybepresumedtobe their confidentialmen, not stenographers as in this casewhoon the last twodays of the conferencewereexcluded.Thereisnoshowingthattheconfereesthemselvesdidnottakenotesoftheirproceedingssoastogivepetitioner Kilosbayan basis for claiming that even in secret diplomatic negotiations involving state interests,conferees keep notes of their meetings. Above all, the public's right to know was fully served because theConferenceCommitteeinthiscasesubmittedareportshowingthechangesmadeonthedifferingversionsoftheHouseandtheSenate.

    Petitioners cite the rules of both houses which provide that conference committee reports must contain "adetailed,sufficientlyexplicitstatementofthechangesinorotheramendments."Thesechangesareshowninthebill attached to the Conference Committee Report. The members of both houses could thus ascertain whatchangeshadbeenmadeintheoriginalbillswithouttheneedofastatementdetailingthechanges.

    Thesamequestionnowpresentedwasraisedwhen thebillwhichbecameR.A.No.1400(LandReformActof1955)wasreportedbytheConferenceCommittee.CongressmanBengzonraisedapointoforder.Hesaid:

    MR.BENGZON.Mypointoforder is that it isoutoforder toconsider thereportof theconferencecommitteeregardingHouseBillNo.2557byreasonoftheprovisionofSection11,ArticleXII,oftheRulesofthisHousewhichprovidesspecificallythattheconferencereportmustbeaccompaniedbyadetailed statement of the effects of the amendment on the bill of the House. This conferencecommitteereportisnotaccompaniedbythatdetailedstatement,Mr.Speaker.Thereforeit isoutofordertoconsiderit.

    PetitionerTolentino,thentheMajorityFloorLeader,answered:

    MR.TOLENTINO.Mr.Speaker,Ishouldjust liketosayafewwordsinconnectionwiththepointoforderraisedbythegentlemanfromPangasinan.

    There isnoquestionabout theprovisionof theRulecitedby thegentleman fromPangasinan,butthisprovisionappliestothosecaseswhereonlyportionsofthebillhavebeenamended.Inthiscasebeforeusanentirebillispresentedtherefore,itcanbeeasilyseenfromthereadingofthebillwhattheprovisionsare.Besides,thisprocedurehasbeenanestablishedpractice.

    Aftersomeinterruption,hecontinued:

    MR.TOLENTINO.AsIwassaying,Mr.Speaker,wehavetolookintothereasonfortheprovisionsofthe Rules, and the reason for the requirement in the provision cited by the gentleman fromPangasinan is when there are only certain words or phrases inserted in or deleted from theprovisionsofthebillincludedintheconferencereport,andwecannotunderstandwhatthosewordsand phrases mean and their relation to the bill. In that case, it is necessary to make a detailedstatementonhowthosewordsandphraseswillaffectthebillasawholebutwhentheentirebillitselfiscopiedverbatimintheconferencereport,thatisnotnecessary.SowhenthereasonfortheRuledoesnotexist,theRuledoesnotexist.

    (2CONG.REC.NO.2,p.4056.(emphasisadded))

    CongressmanTolentinowassustainedbythechair.Therecordshowsthatwhentherulingwasappealed,itwasupheldbyvivavoceandwhenadivisionoftheHousewascalled,itwassustainedbyavoteof48to5.(Id.,p.4058)

    Noristhereanydoubtaboutthepowerofaconferencecommitteetoinsertnewprovisionsaslongasthesearegermanetothesubjectoftheconference.AsthisCourtheldinPhilippineJudgesAssociationv.Prado,227SCRA703(1993),inanopinionwrittenbythenJusticeCruz,thejurisdictionoftheconferencecommitteeisnotlimitedto resolvingdifferencesbetween theSenateand theHouse. Itmayproposeanentirelynewprovision.What isimportantisthatitsreportissubsequentlyapprovedbytherespectivehousesofCongress.ThisCourtruledthatitwouldnotentertainallegationsthat,becausenewprovisionshadbeenaddedbytheconferencecommittee,therewastherebyaviolationoftheconstitutionalinjunctionthat"uponthelastreadingofabill,noamendmenttheretoshallbeallowed."

    Applying theseprinciples,weshalldecline to look into thepetitioners'charges that an amendmentwasmadeupon the last readingof thebill that eventually becameR.A.No. 7354and thatcopiesthereofinitsfinalformwerenotdistributedamongthemembersofeachHouse.Boththeenrolledbillandthelegislativejournalscertifythatthemeasurewasdulyenactedi.e., inaccordancewithArticle

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    VI, Sec. 26 (2) of the Constitution. We are bound by such official assurances from a coordinatedepartmentofthegovernment,towhichweowe,attheveryleast,abecomingcourtesy.

    (Id.at710.(emphasisadded))

    ItisinterestingtonotethefollowingdescriptionofconferencecommitteesinthePhilippinesina1979study:

    Conference committeesmay be of two types: free or instructed. These committeesmay be giveninstructionsbytheirparentbodiesortheymaybeleftwithout instructions.Normallytheconferencecommitteesarewithout instructions,and this iswhy theyareoftencritically referred toas"the littlelegislatures."Once bills have been sent to them, the conferees have almost unlimited authority tochangetheclausesof thebillsandinfactsometimesintroducenewmeasuresthatwerenot intheoriginal legislation. No minutes are kept, and members' activities on conference committees aredifficulttodetermine.Onecongressmanknownforhisidealismputitthisway:"Ikilledabillonexportincentives formy interestgroup [copra] in theconferencecommitteebut I couldnothavedonesoanywhere else." The conference committee submits a report to both houses, and usually it isaccepted. If the report is not accepted, then the committee is discharged and newmembers areappointed.

    (R. Jackson, Committees in the Philippine Congress, in COMMITTEES AND LEGISLATURES: ACOMPARATIVEANALYSIS163(J.D.LEESANDM.SHAW,eds.)).

    Inciting thisstudy,wepassno judgmenton themethodsofconferencecommittees.Wecite itonly tosay thatconferencecommitteesherearenodifferentfromtheircounterpartsintheUnitedStateswhosevastpowerswenotedinPhilippineJudgesAssociationv.Prado,supra.Atallevents,underArt.VI,16(3)eachhousehas thepower"todeterminetherulesofitsproceedings,"includingthoseofitscommittees.AnymeaningfulchangeinthemethodandproceduresofCongressoritscommitteesmustthereforebesoughtinthatbodyitself.

    V.ThetitlesofS.No.1630andH.No.11197.PALmaintainsthatR.A.No.7716violatesArt.VI,26(1)of theConstitutionwhichprovides that "Everybill passedbyCongressshallembraceonlyonesubjectwhichshallbeexpressed in the title thereof." PAL contends that the amendment of its franchise by the withdrawal of itsexemptionfromtheVATisnotexpressedinthetitleofthelaw.

    Pursuantto13ofP.D.No.1590,PALpaysafranchisetaxof2%onitsgrossrevenue"inlieuofallothertaxes,duties, royalties, registration, license and other fees and charges of any kind, nature, or description, imposed,levied,established,assessedor collectedbyanymunicipal, city, provincial ornationalauthorityorgovernmentagency,noworinthefuture."

    PAL was exempted from the payment of the VAT along with other entities by 103 of the National InternalRevenueCode,whichprovidesasfollows:

    103.Exempttransactions.Thefollowingshallbeexemptfromthevalueaddedtax:

    xxxxxxxxx

    (q) Transactions which are exempt under special laws or international agreements to which thePhilippinesisasignatory.

    R.A. No. 7716 seeks to withdraw certain exemptions, including that granted to PAL, by amending 103, asfollows:

    103.Exempttransactions.Thefollowingshallbeexemptfromthevalueaddedtax:

    xxxxxxxxx

    (q) Transactions which are exempt under special laws, except those granted under PresidentialDecreeNos.66,529,972,1491,1590....

    Theamendmentof103isexpressedinthetitleofR.A.No.7716whichreads:

    ANACTRESTRUCTURINGTHEVALUEADDEDTAX (VAT)SYSTEM,WIDENING ITSTAXBASEAND ENHANCING ITS ADMINISTRATION, AND FOR THESE PURPOSES AMENDING ANDREPEALINGTHERELEVANTPROVISIONSOFTHENATIONAL INTERNALREVENUECODE,ASAMENDED,ANDFOROTHERPURPOSES.

    By stating that R.A. No. 7716 seeks to "[RESTRUCTURE] THE VALUEADDED TAX (VAT) SYSTEM [BY]WIDENINGITSTAXBASEANDENHANCINGITSADMINISTRATION,ANDFORTHESEPURPOSESAMENDINGAND REPEALING THE RELEVANT PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE, AS

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    AMENDED AND FOR OTHER PURPOSES," Congress thereby clearly expresses its intention to amend anyprovisionoftheNIRCwhichstandsinthewayofaccomplishingthepurposeofthelaw.

    PALassertsthattheamendmentof itsfranchisemustbereflectedinthetitleofthelawbyspecificreferencetoP.D. No. 1590. It is unnecessary to do this in order to comply with the constitutional requirement, since it isalready stated in the title that the law seeks to amend the pertinent provisions of the NIRC, among which is103(q), in order towiden thebaseof theVAT.Actually, it is thebillwhichbecomesa law that is required toexpressinitstitlethesubjectoflegislation.ThetitlesofH.No.11197andS.No.1630infactspecificallyreferredto103oftheNIRCasamongtheprovisionssoughttobeamended.WearesatisfiedthatsufficientnoticehadbeengivenofthependencyofthesebillsinCongressbeforetheywereenactedintowhatisnowR.A.No.7716.

    InPhilippineJudgesAssociationv.Prado,supra,asimilarargumentasthatnowmadebyPALwasrejected.R.A.No.7354 isentitledANACTCREATINGTHEPHILIPPINEPOSTALCORPORATION,DEFININGITSPOWERS,FUNCTIONSANDRESPONSIBILITIES,PROVIDINGFORREGULATIONOFTHEINDUSTRYANDFOROTHERPURPOSES CONNECTED THEREWITH. It contained a provision repealing all franking privileges. It wascontendedthatthewithdrawaloffrankingprivilegeswasnotexpressedinthetitleofthelaw.Inholdingthattherewassufficientdescriptionofthesubjectofthelawinitstitle,includingtherepealoffrankingprivileges,thisCourtheld:

    Torequireeveryendandmeansnecessaryfortheaccomplishmentofthegeneralobjectivesofthestatute to be expressed in its title would not only be unreasonable but would actually renderlegislation impossible. [Cooley, Constitutional Limitations, 8th Ed., p. 297] As has been correctlyexplained:

    The details of a legislative act need not be specifically stated in its title, but mattergermanetothesubjectasexpressedinthetitle,andadoptedtotheaccomplishmentoftheobjectinview,mayproperlybeincludedintheact.Thus,itispropertocreateinthesameactthemachinerybywhichtheactistobeenforced,toprescribethepenaltiesforits infraction,and to removeobstacles in thewayof itsexecution. If suchmattersareproperlyconnectedwiththesubjectasexpressedinthetitle,itisunnecessarythattheyshould also have specialmention in the title. (SouthernPac.Co. v.Bartine, 170Fed.725)

    (227SCRAat707708)

    VI.Claimsofpress freedomand religious liberty.Wehaveheld that,asageneralproposition, thepress isnotexemptfromthetaxingpoweroftheStateandthatwhattheconstitutionalguaranteeoffreepressprohibitsarelawswhichsingleoutthepressortargetagroupbelongingtothepressforspecialtreatmentorwhichinanywaydiscriminateagainstthepressonthebasisofthecontentofthepublication,andR.A.No.7716isnoneofthese.

    NowitiscontendedbythePPIthatbyremovingtheexemptionofthepressfromtheVATwhilemaintainingthosegranted to others, the law discriminates against the press. At any rate, it is averred, "even nondiscriminatorytaxationofconstitutionallyguaranteedfreedomisunconstitutional."

    Withrespecttothefirstcontention,itwouldsufficetosaythatsincethelawgrantedthepressaprivilege,thelawcould take back the privilege anytime without offense to the Constitution. The reason is simple: by grantingexemptions,theStatedoesnotforeverwaivetheexerciseofitssovereignprerogative.

    Indeed, inwithdrawingtheexemption,the lawmerelysubjectsthepresstothesametaxburdentowhichotherbusinesseshavelongagobeensubject.ItisthusdifferentfromthetaxinvolvedinthecasesinvokedbythePPI.The license tax in Grosjean v. American Press Co., 297 U.S. 233, 80 L. Ed. 660 (1936) was found to bediscriminatorybecauseitwaslaidonthegrossadvertisingreceiptsonlyofnewspaperswhoseweeklycirculationwasover20,000,with theresult that the taxappliedonly to13outof124publishers inLouisiana.These largepaperswerecriticalofSenatorHueyLongwhocontrolledthestatelegislaturewhichenactedthelicensetax.Thecensorialmotivationforthelawwasthusevident.

    Ontheotherhand,inMinneapolisStar&TribuneCo.v.MinnesotaComm'rofRevenue,460U.S.575,75L.Ed.2d295(1983), thetaxwasfoundtobediscriminatorybecausealthoughitcouldhavebeenmadeliablefor thesales taxor, in lieu thereof, for theuse taxon theprivilegeofusing, storingorconsuming tangiblegoods, thepresswasnot. Instead, thepresswasexemptedfromboth taxes. Itwas,however, latermadetopayaspecialuse taxon thecostofpaperand inkwhichmade these items "theonly itemssubject to theuse tax thatwerecomponentofgoodstobesoldatretail."TheU.S.SupremeCourtheldthatthedifferentialtreatmentofthepress"suggeststhatthegoalofregulationisnotrelatedtosuppressionofexpression,andsuchgoalispresumptivelyunconstitutional."Itwouldthereforeappearthatevenalawthatfavorsthepressisconstitutionallysuspect.(SeethedissentofRehnquist,J.inthatcase)

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    Nor is it true that only two exemptions previously granted by E.O. No. 273 are withdrawn "absolutely andunqualifiedly" by R.A. No. 7716. Other exemptions from the VAT, such as those previously granted to PAL,petroleumconcessionaires,enterprisesregisteredwiththeExportProcessingZoneAuthority,andmanymorearelikewisetotallywithdrawn,inadditiontoexemptionswhicharepartiallywithdrawn,inanefforttobroadenthebaseofthetax.

    ThePPIsaysthatthediscriminatorytreatmentofthepressishighlightedbythefactthattransactions,whichareprofitoriented,continuetoenjoyexemptionunderR.A.No.7716.Anenumerationofsomeofthesetransactionswill suffice toshow thatbyand large this isnot soand that theexemptionsaregranted forapurpose.As theSolicitorGeneralsays,suchexemptionsaregranted,insomecases,toencourageagriculturalproductionand,inothercases,forthepersonalbenefitoftheenduserratherthanforprofit.Theexempttransactionsare:

    (a)Goods for consumption or usewhich are in their original state (agricultural,marine and forestproducts, cotton seeds in their original state, fertilizers, seeds, seedlings, fingerlings, fish, prawnlivestock and poultry feeds) and goods or services to enhance agriculture (milling of palay, corn,sugarcaneandrawsugar,livestock,poultryfeeds,fertilizer,ingredientsusedforthemanufactureoffeeds).

    (b) Goods used for personal consumption or use (household and personal effects of citizensreturningtothePhilippines)orforprofessionaluse,likeprofessionalinstrumentsandimplements,bypersonscomingtothePhilippinestosettlehere.

    (c) Goods subject to excise tax such as petroleum products or to be used for manufacture ofpetroleumproductssubjecttoexcisetaxandservicessubjecttopercentagetax.

    (d) Educational services, medical, dental, hospital and veterinary services, and services renderedunderemployeremployeerelationship.

    (e)Worksofartandsimilarcreationssoldbytheartisthimself.

    (f)Transactionsexemptedunderspeciallaws,orinternationalagreements.

    (g)ExportsalesbypersonsnotVATregistered.

    (h)GoodsorserviceswithgrossannualsaleorreceiptnotexceedingP500,000.00.

    (Respondents'ConsolidatedCommentontheMotionsforReconsideration,pp.5860)

    ThePPIassertsthatitdoesnotreallymatterthatthelawdoesnotdiscriminateagainstthepressbecause"evennondiscriminatorytaxationonconstitutionallyguaranteedfreedomisunconstitutional."PPIcitesinsupportofthisassertionthefollowingstatementinMurdockv.Pennsylvania,319U.S.105,87L.Ed.1292(1943):

    Thefactthattheordinanceis"nondiscriminatory"isimmaterial.TheprotectionaffordedbytheFirstAmendment is not so restricted. A license tax certainly does not acquire constitutional validitybecause it classifies the privileges protected by the First Amendment along with the wares andmerchandiseofhuckstersandpeddlersandtreatsthemallalike.Suchequalityintreatmentdoesnotsave the ordinance. Freedom of press, freedom of speech, freedom of religion are in preferredposition.

    TheCourtwasspeaking in thatcaseofa licensetax,which,unlikeanordinary tax, ismainly for regulation. Itsimposition on the press is unconstitutional because it lays a prior restraint on the exercise of its right. Hence,although its application to others, such those selling goods, is valid, its application to the press or to religiousgroups,suchastheJehovah'sWitnesses,inconnectionwiththelatter'ssaleofreligiousbooksandpamphlets,isunconstitutional.As theU.S.SupremeCourtput it, "it isone thing to imposea taxon incomeorpropertyofapreacher.Itisquiteanotherthingtoexactataxonhimfordeliveringasermon."

    Asimilar rulingwasmadeby thisCourt inAmericanBibleSocietyv.CityofManila,101Phil.386 (1957)whichinvalidated a city ordinance requiring a business license fee on those engaged in the sale of generalmerchandise. Itwasheldthat thetaxcouldnotbe imposedonthesaleofbiblesbytheAmericanBibleSocietywithoutrestrainingthefreeexerciseofitsrighttopropagate.

    TheVAT is,however,different. It isnota license tax. It isnota taxon theexerciseofaprivilege,much lessaconstitutional right. It is imposed on the sale, barter, lease or exchange of goods or properties or the sale orexchange of services and the lease of properties purely for revenue purposes. To subject the press to itspaymentisnottoburdentheexerciseofitsrightanymorethantomakethepresspayincometaxorsubjectittogeneralregulationisnottoviolateitsfreedomundertheConstitution.

    Additionally, thePhilippineBibleSociety, Inc.claims thatalthough it sellsbibles, theproceedsderived from the

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    salesareusedtosubsidizethecostofprintingcopieswhicharegivenfreetothosewhocannotaffordtopaysothat to tax thesaleswouldbe to increase theprice,while reducing thevolumeofsale.Granting that tobe thecase, the resulting burden on the exercise of religious freedom is so incidental as to make it difficult todifferentiate it fromanyother economic imposition thatmightmake the right todisseminate religiousdoctrinescostly.Otherwise,tofollowthepetitioner'sargument,toincreasethetaxonthesaleofvestmentswouldbetolayanimpermissibleburdenontherightofthepreachertomakeasermon.

    OntheotherhandtheregistrationfeeofP1,000.00imposedby107oftheNIRC,asamendedby7ofR.A.No.7716,althoughfixedinamount,isreallyjusttopayfortheexpensesofregistrationandenforcementofprovisionssuchasthoserelatingtoaccountingin108oftheNIRC.ThatthePBSdistributesfreebiblesandthereforeisnotliabletopaytheVATdoesnotexcuseit fromthepaymentofthisfeebecauseitalsosellssomecopies.AtanyratewhetherthePBSisliablefortheVATmustbedecidedinconcretecases,intheeventitisassessedthistaxbytheCommissionerofInternalRevenue.

    VII.Allegedviolationsofthedueprocess,equalprotectionandcontractclausesandtheruleontaxation.CREBAasserts that R.A. No. 7716 (1) impairs the obligations of contracts, (2) classifies transactions as covered orexemptwithout reasonablebasisand (3)violates the rule that taxesshouldbeuniformandequitableand thatCongressshall"evolveaprogressivesystemoftaxation."

    Withrespecttothefirstcontention,itisclaimedthattheapplicationofthetaxtoexistingcontractsofthesaleofreal property by installment or on deferred payment basiswould result in substantial increases in themonthlyamortizationstobepaidbecauseofthe10%VAT.Theadditionalamount,itispointedout,issomethingthatthebuyerdidnotanticipateatthetimeheenteredintothecontract.

    TheshortanswertothisistheonegivenbythisCourtinanearlycase:"Authoritiesfromnumeroussourcesarecitedby theplaintiffs,butnoneof themshowthata lawful taxonanewsubject,oran increased taxonanoldone,interfereswithacontractorimpairsitsobligation,withinthemeaningoftheConstitution.Eventhoughsuchtaxationmay affect particular contracts, as itmay increase the debt of one person and lessen the security ofanother,ormayimposeadditionalburdensupononeclassandreleasetheburdensofanother,stillthetaxmustbe paid unless prohibited by the Constitution, nor can it be said that it impairs the obligation of any existingcontractinitstruelegalsense."(LaInsularv.MachucaGoTaucoandNublaCoSiong,39Phil.567,574(1919)).Indeednotonlyexistinglawsbutalso"thereservationoftheessentialattributesofsovereignty, is . . .readintocontractsasapostulateofthelegalorder."(PhilippineAmericanLifeIns.Co.v.AuditorGeneral,22SCRA135,147 (1968))Contractsmust be understood as having beenmade in reference to the possible exercise of therightful authority of the government and no obligation of contract can extend to the defeat of that authority.(Normanv.BaltimoreandOhioR.R.,79L.Ed.885(1935)).

    Itisnextpointedoutthatwhile4ofR.A.No.7716exemptssuchtransactionsasthesaleofagriculturalproducts,food items,petroleum,andmedicalandveterinaryservices, itgrantsnoexemptiononthesaleof realpropertywhichisequallyessential.Thesaleofrealpropertyforsocializedandlowcosthousingisexemptedfromthetax,but CREBA claims that real estate transactions of "the less poor," i.e., the middle class, who are equallyhomeless,shouldlikewisebeexempted.

    Thesaleoffooditems,petroleum,medicalandveterinaryservices,etc.,whichareessentialgoodsandserviceswasalreadyexemptunder103,pars.(b)(d)(1)oftheNIRCbeforetheenactmentofR.A.No.7716.Petitionerisin error in claiming that R.A. No. 7716 granted exemption to these transactions, while subjecting those ofpetitioner to the payment of the VAT. Moreover, there is a difference between the "homeless poor" and the"homelesslesspoor"intheexamplegivenbypetitioner,becausethesecondgroupormiddleclasscanaffordtorenthousesinthemeantimethattheycannotyetbuytheirownhomes.Thetwosocialclassesarethusdifferentlysituatedinlife."ItisinherentinthepowertotaxthattheStatebefreetoselectthesubjectsoftaxation,andithasbeen repeatedly held that 'inequalities which result from a singling out of one particular class for taxation, orexemptioninfringenoconstitutionallimitation.'"(Lutzv.Araneta,98Phil.148,153(1955).Accord,CityofBaguiov. De Leon, 134 Phil. 912 (1968) Sison, Jr. v. Ancheta, 130 SCRA 654, 663 (1984) Kapatiran ng mgaNaglilingkodsaPamahalaanngPilipinas,Inc.v.Tan,163SCRA371(1988)).

    Finally, it is contended, for the reasons already noted, that R.A. No. 7716 also violates Art. VI, 28(1) whichprovides that "The rule of taxation shall be uniform and equitable. The Congress shall evolve a progressivesystemoftaxation."

    Equalityanduniformityoftaxationmeansthatalltaxablearticlesorkindsofpropertyofthesameclassbetaxedatthesamerate.Thetaxingpowerhastheauthoritytomakereasonableandnaturalclassificationsforpurposesof taxation.Tosatisfy this requirement it isenough that thestatuteorordinanceappliesequally toallpersons,formsandcorporationsplacedinsimilarsituation.(CityofBaguiov.DeLeon,supraSison,Jr.v.Ancheta,supra)

    Indeed, theVATwasalreadyprovided inE.O.No.273 longbeforeR.A.No.7716wasenacted.R.A.No.7716merely expands the base of the tax. The validity of the original VAT Law was questioned in Kapatiran ngNaglilingkodsaPamahalaanngPilipinas,Inc.v.Tan,163SCRA383(1988)ongroundssimilartothosemadein

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    thesecases,namely, that the lawwas "oppressive,discriminatory, unjust and regressive in violationofArt.VI,28(1)oftheConstitution."(At382)Rejectingthechallengetothelaw,thisCourtheld:

    AstheCourtseesit,EO273satisfiesalltherequirementsofavalidtax.Itisuniform....

    The sales taxadopted inEO273 is applied similarly onall goodsand services sold to thepublic,whicharenotexempt,attheconstantrateof0%or10%.

    Thedisputedsalestaxisalsoequitable.Itisimposedonlyonsalesofgoodsorservicesbypersonsengaged in businesswith an aggregate gross annual sales exceeding P200,000.00. Small cornersarisaristoresareconsequentlyexemptfromitsapplication.Likewiseexemptfromthetaxaresalesof farmandmarineproducts,so that thecostsofbasic foodandothernecessities,sparedas theyare from the incidenceof theVAT,areexpected tobe relatively lowerandwithin the reachof thegeneralpublic.

    (At382383)

    The CREBA claims that the VAT is regressive. A similar claim is made by the Cooperative Union of thePhilippines,Inc.(CUP),whilepetitionerJuanT.DavidarguesthatthelawcontravenesthemandateofCongresstoprovideforaprogressivesystemoftaxationbecausethelawimposesaflatrateof10%andthusplacesthetaxburdenonalltaxpayerswithoutregardtotheirabilitytopay.

    TheConstitutiondoesnotreallyprohibittheimpositionofindirecttaxeswhich,liketheVAT,areregressive.Whatit simplyprovides is thatCongressshall "evolveaprogressive systemof taxation." The constitutional provisionhasbeeninterpretedtomeansimplythat"directtaxesare...tobepreferred[and]asmuchaspossible,indirecttaxes should be minimized." (E. FERNANDO, THE CONSTITUTION OF THE PHILIPPINES 221 (Second ed.(1977)).Indeed,themandatetoCongressisnottoprescribe,buttoevolve,aprogressivetaxsystem.Otherwise,sales taxes, which perhaps are the oldest form of indirect taxes, would have been prohibited with theproclamationofArt.VIII,17(1)ofthe1973ConstitutionfromwhichthepresentArt.VI,28(1)wastaken.Salestaxesarealsoregressive.

    Resort to indirect taxesshouldbeminimizedbutnotavoidedentirelybecause it isdifficult, ifnot impossible, toavoid themby imposing such taxes according to the taxpayers' ability to pay. In the caseof theVAT, the lawminimizes the regressiveeffectsof this impositionbyproviding forzerorating of certain transactions (R.A.No.7716,3,amending102(b)oftheNIRC),whilegrantingexemptionstoothertransactions.(R.A.No.7716,4,amending103oftheNIRC).

    Thus,thefollowingtransactionsinvolvingbasicandessentialgoodsandservicesareexemptedfromtheVAT:

    (a)Goods for consumption or usewhich are in their original state (agricultural,marine and forestproducts, cotton seeds in their original state, fertilizers, seeds, seedlings, fingerlings, fish, prawnlivestock and poultry feeds) and goods or services to enhance agriculture (milling of palay, cornsugarcaneandrawsugar,livestock,poultryfeeds,fertilizer,ingredientsusedforthemanufactureoffeeds).

    (b) Goods used for personal consumption or use (household and personal effects of citizensreturning to thePhilippines)andorprofessionaluse, likeprofessional instrumentsand implements,bypersonscomingtothePhilippinestosettlehere.

    (c) Goods subject to excise tax such as petroleum products or to be used for manufacture ofpetroleumproductssubjecttoexcisetaxandservicessubjecttopercentagetax.

    (d) Educational services, medical, dental, hospital and veterinary services, and services renderedunderemployeremployeerelationship.

    (e)Worksofartandsimilarcreationssoldbytheartisthimself.

    (f)Transactionsexemptedunderspeciallaws,orinternationalagreements.

    (g)ExportsalesbypersonsnotVATregistered.

    (h)GoodsorserviceswithgrossannualsaleorreceiptnotexceedingP500,000.00.

    (Respondents'ConsolidatedCommentontheMotionsforReconsideration,pp.5860)

    On theotherhand, the transactionswhicharesubject to theVATare thosewhich involvegoodsandserviceswhichareusedoravailedofmainlybyhigherincomegroups.Theseincluderealpropertiesheldprimarilyforsaleto customers or for lease in the ordinary course of trade or business, the right or privilege to use patent,

  • 11/12/2015 G.R.No.115455

    http://www.lawphil.net/judjuris/juri1995/oct1995/gr_115455_1995.html 14/14

    copyright, and other similar property or right, the right or privilege to use industrial, commercial or scientificequipment,motionpicturefilms,tapesanddiscs,radio,television,satellitetransmissionandcabletelevisiontime,hotels,restaurantsandsimilarplaces,securities,lendinginvestments,taxicabs,utilitycarsforrent,touristbuses,andothercommoncarriers,servicesoffranchisegranteesoftelephoneandtelegraph.

    TheproblemwithCREBA'spetitionisthatitpresentsbroadclaimsofconstitutionalviolationsbytenderingissuesnot at retail but at wholesale and in the abstract. There is no fully developed record which can impart toadjudicationtheimpactofactuality.Thereisnofactualfoundationtoshowintheconcretetheapplicationofthelawtoactualcontractsandexemplify itseffectonpropertyrights.Forthefact isthatpetitioner'smembershavenotevenbeenassessed theVAT.Petitioner'scase isnotmadeconcretebyaseriesofhypotheticalquestionsaskedwhicharenodifferentfromthosedealtwithinadvisoryopinions.

    Thedifficultyconfrontingpetitioner is thusapparent.Heallegesarbitrariness.Amereallegation,ashere,doesnotsuffice.Theremustbeafactualfoundationofsuchunconstitutionaltaint.Consideringthatpetitionerherewouldcondemnsuchaprovisionasvoidonitsface,hehasnotmadeoutacase.This is merely to adhere to the authoritative doctrine that where the due process and equalprotectionclausesareinvoked,consideringthattheyarenotfixedrulesbutratherbroadstandards,there isaneed forproofofsuchpersuasivecharacteraswould lead tosuchaconclusion.Absentsuchashowing,thepresumptionofvaliditymustprevail.

    (Sison,Jr.v.Ancheta,130SCRAat661)

    Adjudicationofthesebroadclaimsmustawaitthedevelopmentofaconcretecase.Itmaybethatpostponementofadjudicationwouldresultinamultiplicityofsuits.Thisneednotbethecase,however.Enforcementofthelawmaygiverisetosuchacase.Atestcase,providedit isanactualcaseandnotanabstractorhypotheticalone,maythusbepresented.

    Nor is hardship to taxpayers alone an adequate justification for adjudicating abstract issues. Otherwise,adjudicationwouldbenodifferentfromthegivingofadvisoryopinionthatdoesnotreallysettlelegalissues.

    WearetoldthatitisourdutyunderArt.VIII,1,2todecidewheneveraclaimismadethat"therehasbeenagraveabuseofdiscretionamountingtolackorexcessofjurisdictiononthepartofanybranchorinstrumentalityofthegovernment."Thisdutycanonlyariseifanactualcaseorcontroversyisbeforeus.UnderArt.VIII,5ourjurisdictionisdefinedintermsof"cases"andallthatArt.VIII,1,2canplausiblymeanisthatintheexerciseofthatjurisdictionwehavethejudicialpowertodeterminequestionsofgraveabuseofdiscretionbyanybranchorinstrumentalityofthegovernment.

    Put inanotherway,what isgrantedinArt.VIII,1,2is"judicialpower,"whichis"thepowerofacourttohearanddecidecasespendingbetweenpartieswhohavetherighttosueandbesuedinthecourtsoflawandequity"(Lambv.Phipps, 22Phil. 456, 559 (1912)), asdistinguished from legislativeandexecutivepower.This powercannotbedirectlyappropriateduntil it isapportionedamongseveralcourtseitherby theConstitution,as in thecaseofArt.VIII,5,orbystatute,as in thecaseof theJudiciaryActof1948(R.A.No.296)and theJudiciaryReorganization Act of 1980 (B.P. Blg. 129). The power thus apportioned constitutes the court's "jurisdiction,"definedas"thepowerconferredbylawuponacourtorjudgetotakecognizanceofacase,totheexclusionofallothers."(UnitedStatesv.Arceo,6Phil.29(1906))Withoutanactualcasecomingwithinitsjurisdiction,thisCourtcannotinquireintoanyallegationofgraveabuseofdiscretionbytheotherdepartmentsofthegovernment.

    VIII.Allegedviolationofpolicytowardscooperatives.Ontheotherhand,theCooperativeUnionofthePhilippines(CUP),afterbrieflysurveyingthecourseoflegislation,arguesthatitwastoadoptadefinitepolicyofgrantingtaxexemption to cooperatives that the present Constitution embodies provisions on cooperatives. To subjectcooperativestotheVA